Iran’s head of Atomic Energy
Organisation Ali Akbar Salehi (L) and the head of the
Central Bank of Iran, Valiollah Seif, on January 17 after
international sanctions on Iran were lifted

The big moment arrived. On January 17, after the European
Union said it had implemented regulation to remove
sanctions against Iran, Swift was turned back on in Iran.
And, in some cases, appeared not to work.

Well, you know how it is when your computer has been
switched off for a while. Apparently, reconnecting to Swift
itself is a straightforward process, but the problem has arisen
with the Cisco systems that are instrumental to its effective
running. Some banks in Iran report either that their licences
had expired while
under sanctions and now need to be reissued; or that their
software is no longer up to date after all the years in the
wilderness.

Swift confirms to Euromoney that many
Iranian banks are now exempt from the financial messaging
restrictions that the EU imposed on them in March
2012.

"Swift has informed the relevant stakeholders about the
necessary measures that need to be put in place to make it
possible for those banks that are delisted by the implementing
regulation to reconnect to Swift," it says. "Those banks that
are delisted by the implementing regulation will now
automatically be able to reconnect to Swift, following the
completion of our normal connection process."

This is understood to include administrative and systems
checks, connectivity and technical arrangements.

Problems

"The implementing regulation does not repeal all EU
sanctions on all Iranian banks, therefore Swift remains
prohibited from providing specialised financial messaging
services to the EU-sanctioned Iranian banks that remain listed
under EU regulation," Swift says, adding that it is
incorporated under Belgian law and has to comply with all
related EU regulation as confirmed by the Belgian
government.

Swift declines to comment on any specific problems with
reconnection in Iran, nor on its arrangements with Cisco; Cisco
did not respond to requests for comment.

These are purely teething problems but Euromoney understands
that in the long-awaited relative freedom that has followed the
implementation of the nuclear agreement, some banks are still
transacting payments through intermediary banks in Oman and
Turkey.

We do know, though, that most banks are at least permitted
to rejoin the international banking fold.

"One of the first steps following implementation was the
official removal of restrictions on most banks in the Iranian
banking system," says Radman Rabii at Firouzeh Asia Brokerage
in Tehran. "The Central Bank of Iran announced on Wednesday
[January 20] that restrictions on using the Swift network have
been lifted, and reconnection by Iranian banks is expected in
the coming days."

The central bank then came out with a list of newly
reconnected banks – including some surprising names.
Several of the big private banks, such as Saman, Pasargad and
Parsian, reconnected first, with two of the smaller state-run
banks, Maskan and Keshavarzi, all as expected. Then the central
bank named 12 further state banks that are now reconnected,
among them the big names of Bank Mellat, Bank Melli, Tejarat
Bank and Bank Sepah.

The last of these names is the one raising eyebrows both
within and outside Iran. Sepah is the Persian word for army.
Its capital was originally provided by the Army Pension Fund.
It has been under
US sanctions since 2007, with the US claiming then that the
bank actively assisted Iran in developing missiles that could
carry nuclear weapons (which the bank fervently
denied).

It had always been assumed that Sepah, with such clear links
to the military, would be excluded at least from the first
round of sanctions relief, and indeed, when the Joint
Comprehensive
Plan Of Action (the nuclear agreement) was announced, Sepah
was on the list of banks that remained under sanction. Now, it
appears, it no longer is.

One thing rapidly becoming clear as Iran’s
international banking devices start up again is that the flow
of capital is at first going to be with the east, not the west.
Just as the tankers leaving Iran, on the morning after the
sanctions were lifted, were headed for India rather than the
Suez Canal, it is thought that the first foreign bank to resume
full banking lines with Iran was China’s ICBC.
Then, on January 21, the Central Bank of Iran said that ICBC
had formally requested the right to open branches in Iran, both
on the mainland and within the free trade zone of Kish
Island.

Hossein Yaqoubi Miab, the director for
international affairs at the central bank, also told local
media that he had received similar requests to open branches
from banks in Australia, Italy and Lebanon. Now comes the next
phase of Iran’s rehabilitation: guessing who they
are.

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